Credit Card Companies and Transaction Blocking

I will travel to London in mid-September to speak at the LSE.  As I tried to use my Mastercard to pay for my London plane ticket, I was informed by the British Airways Webpage that my credit card company had blocked my transaction. I called Mastercard and their agent told me that the transaction was blocked because their software had viewed the transaction as “suspicious”.   This interests me because I was in Europe in March and in China in July.  I used my credit card in both cases and I would think that this paper trail would suggest that I do travel abroad.    The Mastercard representative assured me that their sole goal is to protect me from fraud and I appreciate that. 

In other news, I am in Berkeley and in this cross-post, I discuss some of things I have recently seen and read.

Author: Matthew E. Kahn

Professor of Economics at UCLA.

15 thoughts on “Credit Card Companies and Transaction Blocking”

  1. FWIW… I’m a United Premier Executive… 50K miles so far this year and my credit card company routinely declines my purchase of the same round SFO LHR flight. I’m going to start calling them before I book so I can make sure I don’t lose my seat choices.

    Very frustrating.

  2. I dunno. I was contacted because my card had been used in and around Marseilles, where I’ve never been, and I was fairly happy the company was on the ball (although the card was in fact accepted for those transactions, and in any case I would never have been liable for them).

    I guess a lot of this has to do with how troublesome the correction process is. If you can get someone on the line in 90 seconds, and fix things, and they’re not too wildly hair-trigger about this power, it seems to me that it’s not a bad thing. If they impose the penalty at the drop of a hat and it takes an hour on hold to fix the problem, that’s a different kettle of fish.

  3. It may be frustrating when they make a mistake, but at least it just takes a phone call to fix. On the other hand, when there’s really a problem, it’s a life saver. A couple summers back, I had the same problem. I had recently traveled between NYC, Lake Placid, Portland, and Saratoga, NY. My card was declined, so I called in, thinking that it was just the unusual sequence of travel locations. Nope, the first question asked was: “Did you recently make a purchase at a gas station in South Florida?” The card was immediately canceled, the charges removed, and all I had to do was sign a form stating that I wasn’t in South Florida at the time. Also, my girlfriend at the time was from Fort Lauderdale, and we traveled there several times a year. So a more “relaxed” system could have assumed it was me.

    -Bruce

  4. These guys are not being aggressive enough, in my view. When I buy something at other than the Giant Food in Arlington or the Home Depot in Falls Church, or for UPS to deliver to my home address, a message should pop up for the cashier: Tubby middle aged white guy? Balding, and what remains is white? Five foot eight? No visible tats? and any answer other than yes-yes-yes-yes ought to result in a demand for my driver’s license.

  5. Matthew, I don´t quite understand Mastercard’s actions in your case. If they want to protect you from fraud and catch these crooks, in this case, a possible “suspicious” over a thoussnd dollar email purchase of a airline ticket for September, they could contact you to verify it, after your purchase. Then if it were someone else who bought the ticket, using your card and password, they would have an excellent chance to catch the crook red-handed either through the return email address of the ticket or if that fails, when the fraudster shows up at the airport to take his seat. It could be part of much larger hacking scheme but I suppose they don´t really want the hassle. Instead, they just cause you some bewilderment and nuisance and if it were a crook using your card, I doubt they would have much of a paper trail to catch him or them.

  6. Some credit unions have a blanket ban on internet transactions via their debit cards anywhere in the UK. Can’t be lifted, either. Just a flat ban “because of fraud”.

    As a classicist-cum-Celtic studies bod, I wind up keeping a separate credit card just for book purchases from there.

  7. Where I am when I do a big purchase with my credit card I get an SMS with the amount. And when I buy a travel ticket, to allow it I get an SMS with a code that I’ve to enter to validate it.

  8. I recently got a call from Visa about a suspicious transaction – a “request for authorization,” apparently – that came over the Internet. They rejected it, and rightly so, since it wasn’t from me, as I told them. That led to a card cancellation and replacement, etc.

    It would be interesting to know how the algorithms for this work, but of course that’s likely a well-guarded secret, for good reason. Still, they were effectve here.

  9. I used to always get blocked when I went abroad, until I learned the following trick: Call your credit card company before you leave and tell them where you will be going. They put a note in your file for the fraud prevention team.

  10. Credit card issuers are remarkably inconsistent with regard to their approach to fraud. They accept fraud as a cost of doing business, because the overall convenience of the product results in a volume of transactions that make up the difference. On one hand, yes, they employ some algorithms to flag potentially fraudulent behavior. On the other, Visa regulations prohibit merchants from asking for ID when using a credit card — their rule is, if you are holding a Visa-branded card in your hand, it must be accepted with no questions asked, regardless of how sketchy or suspicious your transaction may look.

    I’ve had Visa call me when my credit card turned up in unexpected places — drove from NYC to Tennessee, so no use of credit card on airlines, but then started charging meals and hotels.

    On the other, when someone got hold of my credit card a few years back and started buying gift certificates in every Target in northern Virginia and Maryland at the max amount of $400, to a total of over $4000, not a peep from my issuer. I got the bill, and after my eyes went back in my head, charged it all back. It was clearly fraud, so they refunded it all without much problem. However they settle fraud with their huge client Target determined how the loss was absorbed.

    They have a lot of fraud, they know it, and historically they’ve built it into the interchange charges that merchants get socked with. It will be interesting to see if the Durbin amendment going into effect in October — limiting debit card interchange to 21 cents plus 5 bps on the total — will get them to take fraud more seriously, as it may now represent an intolerable loss in a lower-margin business.

  11. Above, someone got hold of my credit card number, not my credit card, before going on their gift-certificate spree. The card was safely in my wallet the whole time.

  12. @EMRVentures

    On the other, Visa regulations prohibit merchants from asking for ID when using a credit card

    Either this isn’t true, or every supermarket (and many other stores) in Southern California has an official policy of consistently flouting this part of their contract with VISA. I am asked to show ID practically every time I use my VISA card, and it’s pretty clearly policy; this is when making minor purchases of staple items at supermarkets I visit every week or two, and the request is made by bored and disinterested cashiers, so it’s not like I’m getting flagged for special treatment.

  13. @Warren Terra:
    It wouldn’t surprise me if it were both true and routinely flaunted — there have always been a lot of gas stations that flaunt the provision of their agreements not to charge a different price for cash and credit transactions, for example.

  14. AmEx emailed me not long ago about charges to my card number that had been fraudulently made to a dating site. I was impressed, because the only reason they had to be suspicious was that I’m 69 years old. I called immediately, and we went over the most recent charges to my account, most of which were also fraudulent, but made to vendors that they’d have had *no* reason to be suspicious of my doing business with (e.g., Target). They removed all the bogus charges with no argument and sent me a new card overnight.

  15. They’re not protecting YOU against fraud, they’re protecting themselves. Fraud doesn’t cost you anything. I wish they’d be more honest.

Comments are closed.